Sula Vineyards Ltd Management Discussions

Indian Economy

The real annual GDP growth for FY 2026 is estimated
at 7.6%, higher than the 71% recorded in FY 2025
underpinned by the double engine of domestic
consumption and investment. India remains among
the fastest-growing major economies globally.⁶

Strength in domestic consumption in FY2026 was
supported by low inflation, stable employment
conditions, and rising real purchasing power. Rural
consumption bolstered by strong agricultural
performance, along with the gradual improvement
in urban consumption aided by the rationalization
of direct and indirect taxes, reaffirms that the
momentum in consumption demand is broad-based.
Along with consumption, investments continued to
anchor growth in FY2026.⁷

Indias inflation remained in control in FY26 with
consumer price index estimated to be at 21%. Over the
last 3 years, retail inflation in India has followed a steady
downward path, falling from 5.4% in FY24 to 4.6% FY25,
and further to 2.1% FY26³.

Going forward, the Indian economy is expected grow
at 6.9% in FY27 as per RBI which anticipates a more
subdued expansion in FY27 with rising oil prices, West
Asia war and global geopolitics weighing on outlook.
These factors could impact inflation, currency stability,
and overall economic momentum. Despite a marginally
slower growth, India will continue to be a growth bright
spot in FY27. ⁶

The Indian AlcoBev Market is valued at $60 Bn
in 2025 and ranked as the third largest market
globally in terms of volumes (million liters)
trailing only the United States and China.
Further, the Indian Alcobev market is among
the fastest growing globally led by changing
customer preferences, increased disposable
incomes and urbanization.⁵

Despite its large overall market size, Indias
alco-beverage sector remains significantly
underpenetrated on a per capita basis relative
to global benchmarks. Beer and wine, in
particular, continue to be niche segments
compared to spirits -largely due to cultural
preferences -highlighting the significant
headroom for future growth and expansion^4,5.

Looking ahead, the Indian AlcoBev market
remains on a healthy growth path with the
market expected to grow at 7.9% CAGR in value
terms over the longer term to reach a market
size of $110 Bn by CY 2033.⁵

- Rise in disposable incomes and discretionary
spending

- Increase in per capita alcohol consumption
with changing social norms & evolving attitude

- Rising number of women drinkers in urban
markets

- Wider Consumer Choice: Expansion in

alcohol brands and categories

- Expansion in Alcobev distribution across
India, especially in Tier 2 and below cities

Indias wine market is estimated at around $150-
200 million, encompassing both domestic and
imported wines, with annual sales exceeding 3
million cases⁸. Despite this, wine remains at a
nascent stage, contributing less than 1% to the
overall Indian alco-beverage market. Per capita
wine consumption in India is also significantly
low at under 50 ml per year, as compared to
the global average of approximately 5.5 liters
- indicating significant untapped potential for
growth.¹²

Following a phase of strong double-digit growth
in the post-Covid period (FY21-FY24), the
Indian wine industry has witnessed a period of
consolidation in the past couple of years (FY24-
FY26). Growth was also affected by multiple
regional regulatory disruptions. However, with
most headwinds now easing, the industry
appears positioned to return to growth.

Looking ahead, the Indian wine market is poised
for sustained long-term expansion, driven by
rising income levels and affluence, increasing
urbanization, shifting consumer preferences,
and a growing base of working women and
female consumers.^1,2.

- Favorable Demographics: Indias evolving
demographic profile supports industry
growth, with a rapidly expanding middle
class that is open to experimentation, and
a young population increasingly willing to
explore diverse beverage choices, including
wine.

- Aspirational Appeal: A key driver of growth
is the increasing acceptance of wine among
urban, middle-class consumers, where it
is perceived as a refined and aspirational
beverage.

The industrys growth is further aided by the
emergence of new wineries and vineyards,
along with a broader range of red, white, and
rose varietals across the country.

- Food Pairing Trends: The rising popularity
of Western cuisines, especially Italian
and French, has supported greater wine
consumption as a complementary drink.

- Online Ordering & Home Delivery: The

pandemic accelerated the development
of new sales channels, with home delivery
and limited e-commerce options gaining
traction due to convenience and enhanced
purchase experience, attracting a wider
consumer base, including women. This
channel is expected to drive deeper market
penetration going forward.

- Premiumization: The pandemic also fuel ed
premiumization, as consumers sought
"affordable luxury" experiences at home
and showed a willingness to spend more on
higher-quality products. This trend continues
across categories, including sparkling
wines, where premium offerings are gaining
momentum.

- Rise of In-Home Consumption: Post-

pandemic, there has been a structural shift
in consumption patterns, with a notable
increase in at-home drinking occasions.

- Supportive Regulatory Environment: Growth
in the Indian wine industry has also been
supported by favorable policies that classify
wine as a distinct category. States such as
Maharashtra and Karnataka have played a
key role in fostering the development of the
domestic wine ecosystem.